Forbes offers another view on Astros profits

It’s another day, which brings yet another opinion via Forbes.com on the Astros’ relative profitability – or the lack thereof.

This time, it comes via Maury Brown, who contributes stories to the financial website and also operates his own site, Bizofbaseball.com. And, unlike Forbes.com contributor Dan Alexander, who earlier this week said the 2013 Astros are the most profitable team in MLB history, with operating income of $99 million, Brown writes that the Astros “are not the most profitable MLB club in history. As well, they are most assuredly not even the most profitable this year.”

Brown also describes the earlier story as “grossly inaccurate” – tough talk among writers – and “terribly off course.”

Brown’s logic follows the protestations of Astros owner Jim Crane and club president Reid Ryan in the wake of the earlier story: that because of limited carriage deals, the ballclub is not being paid anywhere near the estimated $80 million per year from Comcast SportsNet Houston, the regional sports network started last year by the Astros, Rockets and NBC Sports Group.

Brown also questions the accuracy of the $80 million figure, which, ironically, appears to have stemmed from a 2012 Forbes report, noting that broadcast agreements are generally back-loaded with higher payments and smaller payments in the first years of the deal.

He also notes operating losses and start-up costs for CSN Houston, of which the Astros own 46.384 percent (although, to be fair, the earlier Forbes story notes that the magazine for accounting purposes considers RSN costs and revenue to be separate from operating income figures) and that the ballclub likely has to contribute some local revenue to MLB’s revenue-sharing pool.

The story also questions the logic of framing the Astros’ rebuilding process as a “money grab,” given the plan of Crane and general manager Jeff Luhnow to rebuild with younger players and draft choices.

It should be noted that Brown has been critical of Crane, at one point predicting he could be the most controversial owner in baseball, and also has questioned aspects of the Astros’ rebuilding process.

However, he concludes, “The bottom line is Alexander’s story missed the bottom line. The 2013 Astros aren’t anything remotely what was portrayed. In that, the story is a massive strikeout. The Astros could eventually move into the upper echelons of profitability… somewhere in the distant future.”

Brown’s report, however, did not offer a stance on if the Astros were making money, or how much, this season.

There was no immediate response from the Astros. In the wake of the previous Forbes story, the ballclub said in a statement that it was “disappointed” by the “significant inaccuracies” in the Forbes.com story but would not disclose information on the Astros’ finances:

“As MLB will confirm, the information reported in the Forbes article relating to the Astros’ revenues, the Astros’ media rights fee from CSN Houston, and CSN Houston’s per subscriber rate are all significantly inaccurate. As a result, the conclusion about the Astros’ operational profit is significantly inaccurate,” the statement added.

A Forbes.com spokeswoman said earlier this week that the publication stands by the accuracy and the methodology used in compiling the first story on the Astros’ finances.

Meanwhile Thursday, Dan Alexander, the Forbes.com writer who wrote the original story, stood by its methodology but suggested ways in which the Astros could argue that the team is not recording record profits. That would include a lower CSN Houston rights fee, a slight reduction in revenue sharing proceeds, reduced proceeds from CSN Houston, depreciation and interest expenses that could result in a net income loss of $13 million.

The original Forbes.com story measured operating income, which does not include many of those elements.